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United States v. Denunzio

United States District Court, D. Massachusetts

May 12, 2015



NATHANIEL M. GORTON, District Judge.

On October 1, 2014, the Grand Jury returned a two-count indictment charging defendants Dustin J. DeNunzio ("DeNunzio"), Anthony Gattineri ("Gattineri") and Charles A. Lightbody ("Lightbody") with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371 (Count I), and wire fraud, in violation of 18 U.S.C. § 1343 (Count II). The charges stem from defendants' alleged efforts fraudulently to conceal the equity ownership interest that Lightbody, a convicted felon with purported mafia connections, had in an entity that owned a 33-acre parcel of undeveloped commercial property in Everett, Massachusetts ("the Everett Parcel"). The defendants were in the process of selling that land to a prospective casino resort developer. The government contends that defendants hid Lightbody's interest both from 1) Wynn Resorts Limited LLC ("Wynn"), which entered into a contract with FBT Everett Realty LLC ("FBT"), the entity formed by defendants to hold the Everett Parcel, to retain the option to purchase the land and 2) the Investigations and Enforcement Bureau ("IEB") of the Massachusetts Gaming Commission ("MGC") during its 2013 investigation into Wynn's casino license application. Currently before the Court is the motion of DeNunzio and Gattineri to sever their cases from the case against defendant Lightbody. For the reasons that follow, the motion will be denied.

I. Background

In October 2009, FBT purchased the Everett Parcel for approximately $8 million. At the time of the purchase, Gattineri and Lightbody, along with Paul Lohnes ("Lohnes") and Gary DeCicco ("DeCicco"), held equity ownership interests in FBT. In 2011, DeNunzio received a small ownership interest in FBT and agreed to manage its daily operations. By early 2012, Gattineri, Lightbody and DeNunzio held financial interests in FBT of 34%, 12% and 3%, respectively.[1]

In November 2011, the Massachusetts legislature enacted the Massachusetts Expanded Gaming Act. See 2011 Mass. Acts c. 194; M.G.L. c. 23K. The Act provides for up to three "Category 1" destination resort casino licenses; one license covers "Region A" which encompasses the geographic area that includes Everett, Massachusetts. The MGC was given responsibility for evaluating applicants for the Category 1 licenses. To help with that task, the IEB investigated the suitability of casino license applicants and all parties in interest.

It did not take long for FBT to begin pursuing various casino companies to gauge their interest in the Everett Parcel as a possible site for the Region A license. By the Fall of 2012, FBT was involved in negotiations with Wynn about a potential option contract for the Everett Parcel. The government asserts that throughout that time, Lightbody retained his interest in FBT, as evidenced by, inter alia, his inclusion on FBT partner emails and phone conversations he had with DeNunzio.

According to the government, however, in early December, 2012, defendants came to the realization that they needed to take affirmative steps to conceal Lightbody's ownership interest in the Everett Parcel. On December 10, 2012, they learned that a reporter from the Boston Business Journal had contacted Wynn regarding the criminal history of DeCicco and questioned whether he still retained an interest in the Everett Parcel. Supposedly then fearing that Lightbody's criminal history would be discovered, defendants purportedly entered into a conspiracy fraudulently to conceal Lightbody's interest in the land. The government contends that defendants knew discovery of Lightbody's criminal history would mean that Wynn would either 1) pass on the Everett Parcel as its choice for a casino location or 2) be deemed unsuitable for a casino license and fail to gain approval of the MGC.

On December 11, 2012, Lightbody purportedly spoke with an unnamed inmate in the Massachusetts Department of Corrections ("Prisoner Doe"), who also reputedly had mafia connections, about the need to conceal his interest in the Everett Parcel. Lightbody detailed the Boston Business Journal's inquiry and explained that a plan was being put in place to make it appear as though he was being bought out. Prisoner Doe advised Lightbody to "double blind" or even "triple blind" his interest in the land, to which Lightbody responded "[w]ell that's what I'm doing."

The next day, DeNunzio allegedly lied to FBT's attorney and 1) reported that Gattineri had agreed to purchase Lightbody's financial interest by delivery of a $1.7 million promissory note and 2) requested that the attorney report to Wynn that Lightbody no longer had an interest in FBT. Both a Memorandum of Transfer and a Promissory Note purporting to transfer Lightbody's interest were prepared and dated December 14, 2012, but were not executed at that time. It was not until January 28, 2013, that Lightbody and Gattineri executed the fraudulent documents that transferred Lightbody's ownership interest.[2]

Meanwhile, on December 19, 2012, Wynn entered into an option agreement with FBT with respect to the Everett Parcel. According to the Indictment, Wynn agreed to pay $100, 000 per month for the right to purchase the Everett Parcel for $75 million in the event that Wynn was chosen for the Category 1 license in Region A.[3] Shortly thereafter, on January 15, 2013, Wynn submitted its application for the Region A license which proposed the Everett Parcel as the site for the casino.

On January 17, 2013, prior to the execution of the buy-out documents, Wynn's general counsel sent an email to DeNunzio requesting the names of FBT's equity owners. In response, DeNunzio represented that, as of that date, the only individuals with an equity interest in FBT were himself, Gattineri and Lohnes.

In July, 2013, the IEB began questioning defendants about the ownership of the Everett Parcel. The government asserts that, in his first interview with the IEB on July 9, 2013, DeNunzio lied to investigators and reported that Lightbody had transferred his equity interest in the land during the Summer of 2012. Immediately after his initial interview, DeNunzio allegedly backdated the buy-out documents to track his false answer to the IEB. On July 10, DeNunzio had both Lightbody and Gattineri sign the amended Memorandum of Transfer and Promissory Note with an effective date in the preceding summer. The government contends the backdating aimed to conceal further defendants' scheme from investigators and was intended to assure that Wynn would exercise its option to purchase the Everett Parcel upon gaining approval of the Region A license.[4]

II. Motion to Sever

A. Legal Standard

In considering a motion to sever pursuant to Fed. R. Crim. P. 14, the general rule in the First Circuit Court of Appeals "is that those indicted together are tried together to prevent inconsistent verdicts and to conserve judicial and prosecutorial resources." United States v. DeCologero, 530 F.3d 36, 52 (1st Cir. 2008) (quoting United States v. Soto-Beniquez, 356 F.3d 1, 29 (1st Cir. 2004)). To overcome the presumption in favor of a joint trial, a defendant must demonstrate "prejudice so pervasive that a miscarriage of justice looms." United States v. Sotomayor-Vazquez, 249 F.3d 1, 17 (1st Cir. 2001); see also United States v. O'Bryant, 998 F.2d 21, 25 (1st Cir. 1993) ("[W]hen multiple defendants are named in a single indictment, a defendant who seeks a separate trial can ordinarily succeed in obtaining one only by ...

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